Matching across space: evidence from Finland

This paper studies spatial aspects in local labour markets in Finland from the perspective of a matching approach. The monthly data comprise 173 Local Labour Office are as over a 12-year period between January 1991 and August 2002. The basic matching function is extended to account for spatial spill-overs between the local labour markets. The role of population density in the matching process is also examined. According to results, the Finnish local labour markets suffer from a strong congestion effect among job seekers, and spatial spill-overs even strengthen the congestion. An open vacancy is filled much easier than a job seeker is employed. The results show that the matching efficiency i…

Matching in local labour markets : empirical studies from Finland

This thesis studies the matching process of job seekers and vacancies in local labour markets in Finland during the period 1991-2004. Four empirical articles are preceded by an introductory theoretical chapter that discusses micro-level factors behind the macro-level matching function. The first article deals with spatial dependencies in the matching function. According to the results, Finnish local labour markets suffer from a strong congestion effect among job seekers, which is further exacerbated by spatial spillovers from neighbouring areas, particularly in densely populated areas. The results also indicate that the technical efficiency of matching is higher in densely populated areas t…

Opiskeluaikainen työssäkäynti ja työmarkkinatilanne valmistumisen jälkeen: havaintoja rekisteriaineistosta

Technological change, occupational composition, and wage premiums : evidence from linked employer-employee data

The spot market and implicit contracts with high-skilled wages

Regional Matching Frictions and Aggregate Unemployment

This study demonstrates that a stochastic frontier approach applied to regional level data offers a convenient and interesting method to examine how regional differences in matching efficiency and structural factors contribute to aggregate unemployment. The study reveals notable and temporally stable differences in matching efficiency across travel-to-work areas in Finland. If all areas were as efficient as the most efficient one, the number of hirings would increase by about 40 per cent. This would reduce the aggregate unemployment rate from the current 8.5 per cent level to 6.0 per cent. If all the areas shared the same structural characteristics as the most favourable area, the aggregate…

Technological change and wage premiums: historical evidence from linked employer-employee data

Abstract This study analyses the impacts of a technological change (the steam engine) on wage premiums. Using historical employer–employee panel data, we found that steam technology had both new skill-demanding and skill-replacing aspects. The former manifested itself as an increase in the demand for high-skilled engineers, the latter in a decline in the demand for intermediate-skilled, able-bodied seamen and an increase in the demand for unskilled engine room operators. Our panel data analysis, which controls for unobserved heterogeneity, implies that high-skilled labourers in abstract tasks and unskilled labourers in manual tasks improved their wage positions relative to intermediate-skil…

Labour market status of job seekers in regional matching processes

This study examines the matching aspects of local labour markets focusing on the status of job seekers in the matching process, on spatial autocorrelation in labour market conditions of local labour markets, and on differences in matching processes between areas with permanently deviating unemployment rates. The data set is temporally, spatially, and by labour market positions of job seekers highly disaggregate monthly data from 171 Local Labour Offices (LLOs) in Finland over 12 years. According to the results, an increase in the share of long-term unemployed job seekers decreases matches, and an increase in the share of job seekers out of labour force increases successful matches in local …

Matching inefficiencies, regional disparities and unemployment

.  In this paper we apply a stochastic frontier approach to examine how matching inefficiencies and regional disparities in structural factors contribute to regional and aggregate unemployment. Our results suggest that there would be a substantial decline in aggregate unemployment if (i) all local labour offices operated with full efficiency or (ii) they shared the same structure of job seekers and vacant jobs as the most favourable office. In the former case an increase in hirings would lower the average unemployment rate by 2.4 percentage points. In the latter case the decrease would be 1.4 percentage points. Further, we find that fixed effects are positively correlated with both a more f…

Technological change and wage premiums: historical evidence from linked employer-employee data

This study analyses the impacts of a technological change (the steam engine) on wage premiums. Using historical employer–employee panel data, we found that steam technology had both new skill-demanding and skill-replacing aspects. The former manifested itself as an increase in the demand for high-skilled engineers, the latter in a decline in the demand for intermediate-skilled, able-bodied seamen and an increase in the demand for unskilled engine room operators. Our panel data analysis, which controls for unobserved heterogeneity, implies that high-skilled labourers in abstract tasks and unskilled labourers in manual tasks improved their wage positions relative to intermediate-skilled labou…

Compostition of the job-seeker stock in labour market matching : a stochastic frontier approach

Heterogeneity of job seekers in labour market matching

This study examines the matching of heterogeneous job seekers and vacant jobs. Job seekers are divided into four employability groups according to their labour market status. The dataset consists of highly disaggregated monthly data from 146 Local Labour Offices in Finland over 14 years. The results indicate that the employability of job seekers differs. Therefore, the composition of the pool of job seekers in a local labour market affects the ability of that market to form successful matches. The long-term unemployed have a negative effect on matches while job seekers out of the labour force notably improve the production of matches.

Does population density matter in the matching process of heterogeneous job seekers and vacancies?

This paper analyses the matching process of job seekers and vacant jobs in local labour markets. We investigate how the education level of job seekers and education requirements of vacancies match together in the areas of Local Labour Offices (LLOs), and what is the role of population density in that process. The data set is temporally, spatially, by education level of job seekers and by education requirements of vacancies highly disaggregated monthly data from 146 LLOs in Finland over 14 years. We find differences in the abilities of local labour markets to form successful matches at given levels of inputs. These differences can be explained partly by population density. We control for the…